Question

If union contracts raise wages above competitive levels, what might be one negative outcome?

Industries will raise salaries for top-level workers but not entry-level workers.
Companies will move overseas to escape unions and hire cheaper labor.
Inexperienced workers will lose their jobs to more experienced workers.
Employees will be content with their status and thus less likely to join unions.

Answer 1

Inexperienced workers will lose their jobs to more experienced workers.

Explanation: If union wages exceed the competitive level, firms face higher labor costs and cut back hiring. To get the most output per dollar, they keep or hire higher‑productivity (more experienced) workers and reduce employment of lower‑productivity (inexperienced) workers.